• Mind your Business 
• Wake-up call for Sri Lanka
• JEDB/SPC lead the way to profit-making in state firms
• Extra mileage for TV ads
• ComBank - second thoughts over DFCC 
• The serious business of ageing and caring
• What should be done to light the way?
• News
• SBL – new boost to equity markets

Mind your Business 

Blue chips turning red

It is now no secret that the reds have infiltrated many blue chips through their rank and file and last week counter measures were put into effect in the form of discreet instructions to form rival unions.

But this has to be done covertly and the corporate bosses are already frowning on union activities, so it doesn't augur well for the private sector either.

Endangered bird of paradise

But with a global crisis threatening the airline industry, the outlook is bleak for the bird and the managers from the desert are exploring other ways and means out of the predicament.

And the whisper is that grounding the bird and selling off its assets is being talked of in very serious terms and no more as a last resort.

Banking on cricket

So the guru who turned around our country's most popular sport and the man who tells us to trim costs or face the wrath of international donors have become favourites on the circuit – some of which don't suit their style. Nevertheless all for the cause of attracting a crowd, seminar organisers say.

Wake-up call for Sri Lanka

By Feizal Samath

But this time it is the private sector that is getting proactive and stepping in to market the state-run port. "Time is running out. We need to revive interest in the Colombo port and we need to be proactive. In the past two weeks there has been a 30 percent fall in transshipment cargo," said Parakrama Dissanayake, vice chairman of the Ceylon Association of Ships Agents (CASA).

He said CASA was preparing a strategy paper on an image building exercise for the Colombo port and planned to discuss it with Shipping and Ports Minister, Mahinda Rajapakse. "We want to persuade the minister to release funds from the Shipping Development Fund for this programme in which we hope to send a team to India to meet exporters and persuade them to use the Colombo port."

He said there was a need to send delegations to Chennai, Delhi and Mumbai; meet with chambers and exporters and convince them of the benefits of using Colombo. "We need then to send delegations to Pakistan and Bangladesh and convince them too."

The comments came amidst a flurry of activity and uncertainly in Colombo last week as the twin effects of the Katunayake attacks by the LTTE in July and fears of a major fallout if the US launched attacks in Afghanistan, gradually seeped into the economy.

There were also voices of reason and moderation. "I don't see a major fallout from the US crisis," noted Central Bank Governor A.S. Jayawardena. "The US had a bigger problem earlier this year when the economy went into recession." He said what would happen now is that the recovery, expected around December, would take longer to probably around early next year. "I think if we get 1-2 percent growth we should be happy because it is a negative scenario all around. Japan, Singapore and most of the Far East are showing minus growth rates while the US is projecting 1/2 percent growth this year."

Surprisingly oil prices fell sharply last week with Middle East crude trading at US $ 21 per barrel on Friday against US $ 25 per barrel a week ago. "I simply can't understand why prices fell so sharply," said a senior Ceylon Petroleum Corporation (CPC) official. Tea markets were also unchanged with local buyers saying their Middle East contacts were buying regularly and offering good prices. Severe undercutting in the travel industry was also being reported. For instance airfares to Riyadh, through one airline, were being offered at Rs. 20,500 for a ticket that normally costs Rs. 25,500. "I am sending 50 workers to the Middle East because of these cut rate prices," one Middle East job agent said.

Some business leaders were suggesting the formation of a national council or economic taskforce to tackle the economic crisis. "Given the state's and opposition's pre-occupation with constitutional councils and no-confidence motions, there seems to be no place in the agenda for the economic crisis and power cuts in particular," one economist said.

National Chamber of Exporters (NCE) President, Patrick Amarasinghe said the government should immediately set up a high-powered task force to tackle economic issues. "It is high time all political parties got together to address the current economic crisis," he was quoted as saying at a press conference.

Rohan Masakorale, Chairman of the Shippers Council, also agreed that the Colombo Port needed a major image building exercise. It is 30th in the world but handles only 20-25 percent of the regional cargo, he said. "We are meeting with CASA and coming up with a strategic paper on how to boost the image of the port and attract business," he said.

JEDB/SPC lead the way to profit-making in state firms

"We are proud of the achievements in the state estate sector and much of that success is due to the staff at all levels," says Dhanasiri de Silva Daluwatte, chairman of the Sri Lanka State Plantations Corp (SPC) and the Janatha Estates Development Board (JEDB).

The two institutions were deep in debt when de Silva took over in June 1996. They are now profitable agencies, even drawing the praise of the private sector. "I have letters from directors of regional plantation companies praising the JEDB/SPC who have been impressed with the maintenance of our tea plants," said Daluwatte, a veteran planter with 38 years experience in private and public sector plantations.

In recent years, much has been written about the ups and downs of plantations companies, most of which are owned by Colombo's big conglomerates like John Keells and Aitken Spence.

In this context it was a pleasant surprise for The Sunday Times Business to learn about the success of JEDB and SPC, which has been mired in debt in the pre-privatisation phase of the plantation sector.

Daluwatte said JEDB/SPC, which has a total of 44 estates including the ten belonging to Elkaduwa Plantations, trim–med losses - in the region of Rs. 250 million before 1996 - to Rs. 8 million in 1997 and onwards to profitability. "This was done through good management, cost cutting and better accounting."

"Our estates have succeeded through management techniques, factory development, changing patterns of manufacture and constant field visits by me and senior management based in Colombo," he said. 

JEDB profits last year were Rs. 8.3 million against a loss of Rs. 3.6 million in 1999 while SPC profits were Rs. 1.7 million against a loss of Rs. 5.7 million in the same years. The losses, according to S.D.A. Jayasuriya, DGM at JEDB/SPC, were due entirely to market forces in the form of falling tea prices.

Daluwatte said monitoring of the estates has been a success. "I visit 3-4 estates a month, probably the only chairman of a plantation company to do so. Thus I interact with staff at different levels, look at their problems and solve them instantly on the field. We have a close rapport with field staff."

The two companies have mostly estates in mid-grown areas and have resorted to producing low grown type orthodox teas in these regions, which fetch a better price.

Staff is provided life insurance policies for the first time in plantation history. Compensatory payments at death range from Rs. 100,000 to Rs. 200,000 while workers are also entitled to Rs. 250 per day as insurance payment in case of hospitalisation.

Daluwatte said they started a novel scheme in 1997 where 80 youngsters with AL/OL qualifications from across Sri Lanka were given intensive training as executive assistant superintendents for the benefit of the industry. They came from Kataragama, Anura–dhapura, Tissa and other remote places. "We are pleased to find that over 75 are now employed by private plantation companies now."

He said the JEDB/SPC has attracted some top management talent in recent years. "When we advertise vacancies for superintendents, 90 percent of the applicants are from private plantation companies."

JEDB/SPC doesn't compromise on agriculture inputs, using the best and regularly even if it is costly. Success is also due to low head office overheads compared to other companies.

The two firms have just ten senior executives at the head office inclusive of the chairman, general manager and deputy general manager. "We are all hands-on workers and as a result our costs are low. For example, we spend 2.50 rupees per kg price as head office costs whereas similar costs of most private plantation firms are in the range of 30-40 rupees per kg price," said Daluwatte. (FS)

Extra mileage for TV ads

By Ashwin Hemmanthagama

In a bid to give advertisers the maximum benefit from programmes aired during power cut hours, the networks are repeating programmes twice and sometimes four times and in the process giving advertisers extra mileage, free of charge.

"The power crisis and the economic crisis have affected our industry. Even if the power is restored, it will take time for us to get back on track," noted Rosmand Senaratne, General Manager at EAP Networks (Pvt.) Ltd, owners of Swarnavahini and a string of other TV and radio stations.

"In being competitive, we have started some special programmes and projects. As an example, to mark Children's Day we launched a massive programme which received a tremendous response. So we know that the viewers are with us." He said in terms of advertising, their TV stations were repeating teledramas for the benefit of those who may have missed the programme due to the power cuts. 

"This gives advertisers double exposure. This is, however, a temporary measure."

He said Sirasa TV was telecasting news programmes four times a day. "That is not all. We have launched a news telecast, every 55 minutes from 7.55 am till 6.55 pm to give the viewers the option of watching the news despite the power cuts."

The MTV director said that with less programmes being produced due to many repeats, research and production staff - with time on their hands - are working out new ways of improving the content of TV and radio programmes.

He said 95 percent of Sirisa TV's programmes are produced locally saving a lot of money for the company. "We are protected in some sense as we don't have 100 percent foreign programmes. These foreign programmes cost US$ 10,000 and can be shown only twice."

ComBank - second thoughts over DFCC 

By Chanakya Dissanayake

There has been a surfeit of letters in newspapers from shareholders, customers and concerned parties criticising the proposed alliance between the two banks, saying it would create a monopoly. A recent circular sent by Commercial Bank chairman, Mahendra Amarasuriya, to its shareholders explaining the current progress of the proposal has led to uncertainty and speculation amongst analysts.

"Many shareholders and employees have expressed concern as to whether the holding company structure is in the best interests of the Commercial Bank," said the circular. "The major shareholder, Sri Lanka Insurance Corporation, has advised that they require to be satisfied, through an independent professional validation, that the proposed structure will lead to enhancement of shareholder value."

The planned consolidation was seen as the first step towards creating a strong financial services group capable of obtaining even an overseas listing. "The fragmented nature of the local private sector prevents larger financial institutions undertaking major projects," an analyst said.

However, when interviewed by the Sunday Times Business, Mr. Amarasuriya said he is giving equal consideration to the concerns of the minority shareholders and employees before arriving at the final decision to proceed with the consolidation. "Big shareholders may want a larger entity. 

But the minority shareholders are concerned about the share price. We will not proceed solely to create a larger entity," he said.

Analysts are not so pleased. "There are many shareholders who bought Commercial Bank shares expecting the consolidation, since the management of both companies gave a clear indication earlier that they are proceeding with it," a fund manager said.

Mr. Amarasuriya clarified the Commercial Bank position saying, "We will proceed only if a due diligence report indicates that the synergy arising from the consolidation will add value to the Commercial Bank."

Commercial Bank union leader, M. R. Shah, said the union was not shown the draft of the joint proposal presented by the bank and DFCC to the Central Bank. "Because we were not informed about the clauses in the proposal we appealed to the Finance Ministry and the Central Bank to disallow the proposal," he said. "At the outset it seems to be unfavourable to our bank," he added.

Meanwhile, DFCC also issued a circular to shareholders on Friday clarifying its position. The statement strongly refuted the "attempts by certain parties" to portray DFCC as a weak institute. It also disputed claims that the consolidation would create a monopolistic situation. "This will not be the case because the products offered by DFCC and Commercial Bank are largely complementary," the DFCC statement said.

DFCC further said that this consolidation would result in the proposed group mobilising equity and debt capital on a large scale at more favourable terms than the two banks could individually.

Banking sector analysts are blaming the government for not giving the financial sector clear signals about how it sees the sector evolving over time. While all Asian banking sectors are seeing waves of consolidation since the 1997 crisis, Sri Lankan legislation prevents consolidation, they say.

"The Central bank is lagging rather than leading developments. This has created an atmosphere where individual banks are acting as they please and no overall direction is discernible in the evolution of the Sri Lankan banking sector," said Arjuna Mahendran, Director, SG Securities-Singapore.

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